China’s currency, the yuan (also called the renminbi or RMB), has long been the subject of global scrutiny and speculation. Many observers wonder whether the yuan will one day supplant the U.S. dollar as the world’s premier reserve currency. Yet headlines today more often focus on a different question: Is the yuan “weak”? And if so, why—and what does that weakness mean in practical terms?
A Brief History of the Yuan’s Exchange Rate
From the mid-1990s until mid-2005, China maintained a rigid peg of approximately 8.28 yuan to the U.S. dollar. During the Asian financial crisis of 1997–98, when neighbouring currencies were collapsing, China’s steady rate was praised for providing stability. But international pressure eventually forced change: on July 21, 2005, Beijing revalued the yuan by about 2% and announced it would manage the currency against a basket of trading-partner currencies rather than solely against the dollar.
Over the next decade, that shift allowed the yuan to strengthen. By early 2008, it traded around 6.8 yuan per dollar—appreciating roughly 18%—before being briefly re-pegged at 6.83 to support exporters through the global financial crisis. From 2010 to 2014, China’s booming economy and large trade surpluses drove further appreciation: by 2014, one dollar bought just about 6.0 yuan, the strongest level in modern history.
The First Signs of Weakness
August 2015 marked the first major crack in that trend. China’s sudden decision to give markets greater influence over the daily fixing caused a roughly 4% devaluation in just days, rattling investors worldwide. Over the rest of 2015 and into 2016, the yuan fell further—losing nearly 9% of its value by year-end amid concerns over slowing growth and capital outflows.
A temporary rebound in 2017 gave way to renewed downward pressure from 2018 onward, as trade tensions with the United States escalated and China’s economy cooled. By mid-2019, the yuan had slid past 7.0 per dollar for the first time since 2008. That breach provoked a diplomatic uproar: Washington formally branded China a “currency manipulator” for the first time in decades. Although a “Phase 1” trade deal later that year helped stabilise the rate near 7.0, the episode underscored that the yuan’s direction was no longer entirely in Beijing’s hands.
Pandemic-Era Swings
When COVID-19 first spread in early 2020, the yuan briefly weakened beyond 7.1 per dollar. But as China recovered faster than most economies and the U.S. Federal Reserve slashed interest rates, the dollar lost ground—allowing the yuan to rally to around 6.36 in early 2021. This surge, the yuan’s firmest in years, was also buoyed by China’s inclusion of the renminbi in the IMF’s Special Drawing Rights basket back in 2016, which had bolstered international confidence.
A Sharp Decline in 2022
That strength proved short-lived. Throughout 2022, aggressive Fed rate hikes to combat inflation strengthened the dollar globally, while China’s strict zero-COVID policies and a slumping property sector weighed heavily on its own economy. The result: the yuan plunged from about 6.3 per dollar at the start of the year to roughly 6.9 by December—a drop of approximately 8.5%, its largest annual decline in decades.
In 2023, an initial rebound to around 6.7 gave way to fresh weakness by year’s end, as growth remained sluggish and the gap between U.S. and Chinese interest rates widened further. The onshore yuan even hit lows of about 7.35 per dollar—the weakest level since December 2007.
Where Things Stand Today
As of April–May 2025, the yuan trades in the mid-7s against the U.S. dollar. In April, renewed trade tensions pushed the onshore rate to about 7.35—the weakest in nearly two decades—prompting Chinese authorities to intervene in currency markets. By mid-May, it hovered closer to 7.2–7.3, still markedly weaker than its 6.0-level peak a decade earlier, yet stronger than the 8.3 peg of the 1990s.
Is the Yuan Truly “Weak”?
It depends on your perspective. If you measure against the dollar and focus on the past few years, the answer is clearly yes: a move from around 6.4 to 7.3 per dollar—roughly a 14% depreciation—can have real effects on trade costs, inflation, and investor sentiment. For many businesses and governments, even a 5–10% swing matters greatly.
Yet on a longer historical scale, the yuan remains stronger today than it was in the late 1990s or early 2000s. It sits roughly where it did in 2007, and far above its fixed-peg era. Moreover, when compared against a broad basket of currencies, the yuan’s decline has been less dramatic than against the surging dollar alone.
Ultimately, “weakness” often reflects the dominance of the U.S. currency. Global trade, commodities, and finance are still largely dollar-denominated, so the yuan’s performance versus the greenback carries outsized weight. But whether that weakness is a sign of deeper economic vulnerability—or simply the other side of America’s strong dollar—remains a matter of debate.
As China navigates the twin challenges of slowing growth and geopolitical friction, currency watchers will be watching every intervention, every policy tweak, and every interest-rate decision for clues as to which way the renminbi will turn next.
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